The opinion of the court was delivered by: McLaughlin, J.
Nationwide Insurance Independent Contractors Association, Inc. ("NIICA") brings suit against Nationwide Mutual Insurance Co. ("Nationwide") challenging changes the defendant has made to its employment contracts in recent years.
The defendant filed a motion to dismiss, abstain or transfer. The Court will grant the defendant's motion to dismiss.
I. Facts as Alleged in the Complaint
NIICA is an organization that represents insurance agents who have contracts with Nationwide. The agents are independent contractors who sell Nationwide insurance policies to their clients. Compl. ¶¶ 2, 16. This lawsuit arises from several changes that Nationwide made in contracts with these independent agents. The plaintiff alleges these changes breach the agents' employment contracts in several ways.
First, NIICA challenges changes in the agents' compensation plans. Id. ¶¶ 30-33. Before 2004, many agents were compensated under a plan in which they automatically accumulated deferred income credits based on their annual earnings. An agent could also choose to enroll in an alternate compensation program which lacked deferred income credits. In 2004, Nationwide introduced a new contract form that eliminated deferred income credits entirely. Id. ¶¶ 30, 33. In September of 2009, Nationwide changed its compensation scheme again by introducing an optional program which altered commission rates on certain products for those agents who chose not to accumulate deferred income credits. Id. ¶¶ 36-40.
The plaintiff alleges that the 2009 change discriminates against those agents who chose not to forgo deferred income credits. Id. ¶¶ 44-45. The plaintiff also alleges that this contract change discriminates against smaller agents who chose to forgo deferred income credits. Id. ¶¶ 63-64. The plaintiff seeks a declaration that this policy change is a breach of agents' existing contracts or of the implied covenant of good faith and fair dealing (Counts One and Three). Id. ¶¶ 49-56, 65.
Second, the plaintiff challenges Nationwide's proposed plan to impose a fee on agents servicing policies through companies other than Nationwide. The plaintiff seeks a declaration that this is a breach of agents' existing contracts or of the implied covenant of good faith and fair dealing (Count Two). Id. ¶¶ 57-61.
Third, the plaintiff objects to another compensation plan change. In 2006, Nationwide introduced a new "On Your Side Promise" plan that offered financial rewards to agents who agreed to submit to certain corporate controls. Id. ¶¶ 34-35. The plaintiff claims that the On Your Side Promise plan discriminates by offering bonuses, which were originally meant to be performance-based, only to those who submitted to new corporate controls. Id. ¶¶ 46, 66. The plaintiff likewise seeks a declaration that this new arrangement is a breach of contract or the covenant of good faith and fair dealing (Count Four). Id. ¶ 67.
Fourth, the plaintiff disputes the validity of Nationwide's claim of exclusive ownership of policyholder information and Nationwide's assertion that policyholder information is its trade secret. Id. ¶¶ 26-27, 39, 74, 81. The plaintiff seeks a declaration that these assertions breach the provisions of pre-2000 contracts which expressly contemplate agents' competition with Nationwide, and are unenforceable with regard to post-2000 contracts (Count Five). Id. ¶¶ 69-74. The plaintiff also objects to the designation of policyholder information as a "trade secret," which the plaintiff claims is unsupportable under trade secret law (Count Six). Id. ¶¶ 76-81.
Finally, the plaintiff seeks an order declaring that Nationwide's administrative handbook, which also asserts that policyholder information belongs exclusively to Nationwide, is not part of agents' contracts (Count Seven). Id. ¶¶ 82-84.
The defendant moves to dismiss the complaint for lack of standing. In the alternative, the defendant argues that the Court should exercise its discretion under the Declaratory Judgment Act and decline to hear this case, or transfer the case to the Southern District of Ohio. Because the Court grants the motion to dismiss for lack of standing, the Court does not consider the defendant's other requests.
An association has the right to bring a lawsuit on behalf of its members even when the association itself has not suffered any direct injury. Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 342 (1977). An association has standing when: 1) its members would otherwise have standing to sue in their own right; 2) the interests it seeks to protect are germane to the organization's purpose; and 3) neither the claim asserted nor the relief requested requires the participation of individual members of the organization. Id. at 343. A plaintiff seeking ...